Refi or HELOC an option or should we sell and start over new

4 Replies

My husband and I are at a cross roads on what to do with our property in Ca. It is a 3/2 SF with a pool in the San Fernando Valley. We are trying to find a way to keep that property and rent it out and refi it to buy another with the BRRR method. We rented the property out the previous year for $400 more than our mortgage.

However, we want to continue to rent out this property and be able to refi it. We are both in real estate and can not show consistent income.

Should we sell this property in San Fernando Valley to jumpstart our investments elsewhere - like Sacramento or is it possible to hold on to this and refi and be able to cash out to buy second property. 

Our house was purchased at 404k, estimated value now is around $570k. Our credit scores are between 620 and 660.

Any advice would be greatly appreciated. Thank you in advance

@Samira King , what will it rent for? It's unlikely to be a great rental at a $570k FMV. You'll need to get close to $6k to even hope that it will cash flow (after refi).

Selling is probably the best option and work on those credit scores.

@Samira King , I am in the exact same situation right now. Self-employment makes the refi part tricky. I know a few lenders who lend based on the properties ablility to cash-flow and not just your income, but their interest rate is a lot higher than what is ideal. 

My thoughts have been to sell, take the proceeds, and park it into a 3-4 unit somewhere that will have long-term appreciation. My other thought is to use the proceeds to fund a few fix and flips and build capital. It is a tough decision and I am in no hurry, but I want to make the right choice.

Is your investing strategy typically buy and hold?

@Samira King

Not sure what you owe........

But for a cash out on 570k you would be at $427.5k max.

Those credit scores are going to have even higher rates with portfolio lending which is what route you will need to go if avoiding conventional lending based on income.

I would suggest selling the property, and fixing your credit scores, then purchasing another property.

Samira! You have options! I hope you haven't listed or sold this property yet. I can offer you a 30 year fixed and up to 75LTV using the 660 score as our borrower. The rate would be 8.49% at par, but buy-down options are available. Additionally if you are brokering your own loan, there may be additional incentives I can offer you to make it sweeter. Let's chat! (BTW I just sold my home in Woodland Hills. I love that area.)